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Passive Tax Loss

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Joanntyson

Junior Member
What is the name of your state? Florida

My husband and I purchased commercial property and formed a s-Corp to acquire and run it. We do all the work for it, we have no property manager or on site repair person. We show and collect the rents, order repairs, etc.

We also own 2 other non-real estate businesses.

We were upset to find out that our "losses" were suspended because we made over $150,000 and if you make over $100,000 you only get part of the losses. Especially since we are doing so much work to the buildings that we expect to lose money for the first few years.

Our accountant went over the law and feels that we could claim that my husband is a real estate professional because he has put in more than 750 hours and 1/2 his work time on the property for last year and will again this year. However, by year 3 I doubt this will be the case. Neither of us has a real estate license.

If we say we are a real estate professional for 04 and 05, would this be an issue? Would the IRS agree with the accountants position?
 



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